1. Corporate Strategy and Entrepreneurship
Chapter 8
Corporate Strategy and Entrepreneurship

2. The Changing Landscape
The contemporary business environment can be characterized in terms of:
increasing risk
decreased ability to forecast
fluid firm and industry boundaries
new rules of the game
new structural forms that not only allow for change but also help create it.

3. The Changing Landscape
Strategic Inflection Points
An inflection point occurs when the old strategic picture dissolves and gives way to the new, allowing the adaptive and proactive business to ascend to new heights
How can organizations know when the time is right to make changes?

4. Strategic Management & Corporate Strategy
In essence, strategic management is the formulation of long-range plans for the effective management of external opportunities and threats in light of a company’s internal strengths and weaknesses
Involves a continuous search for competitive advantages

5. What is Strategy? Mintzberg (1987) 5 Ps of Strategy
Strategy as a Plan—a consciously intended course of action
Strategy as a Ploy—a specific maneuver to outwit competitors or opponents
Strategy as a Pattern—a consistent patterned stream of actions
Strategy as a Position—a means of locating the organization within a competitive environment
Strategy as a Perspective—a cognitive state-of- mind held by organizational decision-makers

6. Dominant Logic Fitting the Competitive Landscape?
Dominant Logic refers to the way in which managers conceptualize the business and make critical resource allocation decisions
The dominant logic that is optimal for the firm in today’s environment may well be inappropriate for the environment that will exist five years hence

7. Dominant Logic Fitting the Competitive Landscape?
One means of creating a dynamic dominant logic is to make entrepreneurship the basis upon which the organization is conceptualized and resources are allocated
As dominant logic, entrepreneurship promotes strategic agility, flexibility, creativity, and continuous innovation throughout the firm

8. Integrating Entrepreneurship with Strategy
The integration of entrepreneurship with strategy has two aspects:
Entrepreneurial Strategy
Application of creativity and entrepreneurial thinking to the development of a core strategy for the firm
Strategy for Entrepreneurship
The need to develop a strategy for the entrepreneurial activities of the firm

9. Entrepreneurial Strategy
Ireland, Covin, and Kuratko (2009) define an entrepreneurial strategy as
“a vision-directed, organization-wide reliance on entrepreneurial behavior that purposefully and continuously rejuvenates the organization and shapes the scope of its operations through the recognition and exploitation of entrepreneurial opportunity.”

10. Developing a Corporate Strategy that is Entrepreneurial
Observed Configurations of the Corporate Venturing-Business Strategy Relationship
Model 1
Model 4 CV BS CV BS
Model 2 CV BS
Model 5 CV BS
Model 3 CV BS
CV = Corporate Venturing
BS = Business Strategy

11. Developing a Corporate Strategy that is Entrepreneurial
Where does the firm want to be in the entrepreneurial grid?
To what extent is the entrepreneurial emphasis in the company that of growing new business and starting new ventures outside the mainstream of the firm vs. transforming the existing enterprise and its internal operations into a more entrepreneurial environment?

12. Developing a Corporate Strategy that is Entrepreneurial
In what areas does the firm want to be an innovation leader vs. an innovation follower vis-a-vis the industry?
In what areas of the firm is management looking for higher vs. lower levels of entrepreneurial activity?

13. Developing a Corporate Strategy that is Entrepreneurial
What is the relative importance over the next three years of product vs. service vs. process innovation?
To what extent is innovation expected to come from senior management, middle management, or first-level management?

14. Managing Innovation Strategically: A Portfolio Approach
Management attempts to draw a balance across five metrics:
High risk, high-return projects against lower-risk, lower return projects
Discontinuous or dynamically continuous innovations against continuous innovations and imitations
Projects with shorter development cycles and payoffs against ones with longer-term outcomes
Products/services intended for markets the firm currently serves against ones for markets that are new to the firm
Projects utilizing new and emerging technologies against those relying on technologies with which the firm is familiar

15. A Portfolio Approach to Innovation
Moderate Innovation Success Probability
High Innovation Success Probability
Highest Innovation Success Probability
Low Innovation Success Probability
Lowest Innovation Success Probability
High
Medium
Low
Firm’s Knowledge Pertaining to the New Products’/Service’s Targeted Market
Low
Medium
High
Firm’s Knowledge Pertaining to the New Products’/Service’s Core Technology

16. Technology, Entrepreneurship, and Strategy
Technology represents both an opportunity and threat for entrepreneurial activity Technology has shortened product life cycles, leading to smaller windows of opportunity in which innovation can occur. This has forced entrepreneurs to have an exit strategy even as the innovation is in the development stages.

17. Technology, Entrepreneurship, and Strategy
Technology allows firms to achieve sustainable competitive advantages if management determine:
How the firm will use technology to position its products/services in the marketplace
How the firm will use technology to enhance its internal processes

18. Two Types of Technological Innovations
Sustaining Technologies – maintains a rate of improvement, giving customers more or better in the attributes, cannot get much better
Speed, quality, size
Disruptive Technologies – introduces a different sets of attributes than ones customers historically value
Introduction of microwave oven
Creates new markets or new applications

19. Two forces that motivate innovation
Technology-push – employees within the firm (usually technically qualified engineers or scientists) see a technical possibility and strive to capitalize on it. These individuals see a new way in which a technology might be applied. Market-pull – innovations start with the customer and are typically driven by marketing people. Customers are often the source of the new idea.

20. Key Strategic Concepts: Entrepreneurship as the Driver
Strategic Positioning
…is concerned with how the firm wants to be perceived in the marketplace
Entrepreneurial strategy is all about positioning. It is a process of perceiving new positions that attract customers from established ones or draw new customers into the market
Effective strategic positioning is critical for competitive advantage

21. Key Strategic Concepts: Entrepreneurship as the Driver
Strategic Flexibility and Adaptation
Strategic flexibility involves a willingness to rethink continuously and make adjustments to the firm’s strategies, action plans, and resource allocations and to the company structure, culture, and managerial systems

22. Key Strategic Concepts: Entrepreneurship as the Driver
The following 5 factors contribute to building strategic leadership:
A unique set of dynamic core competencies
Creative approaches to human capital
Effective incorporation of new and emerging technologies
Strategic alliances and a global market presence
Company structures that are flattened and cultures that stress learning and accountability for innovation

23. Exercise Strategic Leadership Build Dynamic Core Competencies
Focus and Develop Human Capital
Contingency workers and outsourcing
Developing employee skills
Effectively use New Technologies
Manufacturing technologies
Information technologies
Engage in Valuable Strategies
Exploit global markets
Use cooperative strategies
Develop New Organization Structures and Culture
Horizontal organization
Learning and innovative culture
Manage as a bundle of assets
Strategic Flexibility
Competitive Advantage

24. Key Strategic Concepts: Entrepreneurship as the Driver
Strategic Leverage
Leveraging refers to doing more with less
Corporate entrepreneurs and entrepreneurial companies are brilliant “leveragers” of resources
“Getting to the future first is more a function of resourcefulness than resources”

25. Key Strategic Concepts: Entrepreneurship as the Driver
Resource leveraging has a number of dimensions:
Stretching resources much further than others have done in the past
Getting uses out of resources that others are unable to realize
Using other people’s/firm’s resources to accomplish the entrepreneur’s own purpose

26. Key Strategic Concepts: Entrepreneurship as the Driver
Complementing one resource with another to create higher combined value
Using certain resources to obtain other resources

27. Fatal Flaws in ENT Strategy Thinking
Flaw 1: Misunderstanding industry attractiveness Flaw 2: No real competitive advantage Flaw 3: Pursuing an unsustainable competitive position Flaw 4: Compromising strategy for growth Flaw 5: Failure to explicitly communicate strategy internally

28. Conclusion: Combining the Strategic Concepts
Developing an entrepreneurial vision
Increasing the perception of opportunity
Institutionalizing change
Instilling the desire to be innovative
Investing in people’s ideas
Sharing risks and rewards with employees
Recognizing the critical importance of failure
Instilling desires if fed from the bottom three